What is a typical profit margin

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There are plenty of discussions on here already covering this topic, but year end 35% is average for contracting business. How you mark-up and plan to reach that end is the challange.

Your overall planning, and scheduling will have a direct impact on your profits.
 
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No matter what type of install I have never been under the bus by taking the material + 5% and multiplying that by 3. !/3 for material, 1/3 for labor , 1/3 for profit.The 5 % is for anything missed.Has worked since 1973 :)
 
allenwayne said:
No matter what type of install I have never been under the bus by taking the material + 5% and multiplying that by 3. !/3 for material, 1/3 for labor , 1/3 for profit.The 5 % is for anything missed.Has worked since 1973 :)
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So if you had a small job where there was $100.0 for material you would quote it at $620.00?

Is that how I read your method?

Ok I think I messed that up I see now you are Multiplying by 3 and stopping I thought you were multiplying by 3 and then 1/3 again 3 times. so the $100.00 materials would be $315.00 job I don't like that so much.
 
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allenwayne said:
No matter what type of install I have never been under the bus by taking the material + 5% and multiplying that by 3. !/3 for material, 1/3 for labor , 1/3 for profit.The 5 % is for anything missed.Has worked since 1973 :)
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Sure wish I could do that. A lot of my jobs have wire prices in the $30,000 range that I can install in 2-3 days. Something tells me that I won't be able to sell that for $94,500.

I believe it's just a tad more complicated.
 
Heck, on large projects I'm tickled to walk away with 10-15 percent, and with the competitive market out there, that's a fight in itself.

I think every owner, estimator, PM, etc... would love Allens method if it worked.:grin:

Roger
 
profit - I think I'll work on that for 2007

When I bid I figure 15%.

What I get - a little more, a little less, mostly a little.
 
I look at the ratio between material $'s and labor $'s (cost). Example: if misc materials+fixtures+gear is $100,000 and labor dollars are $50,000, that is a 2/1 ratio. If I mark this up 20% for OH&P, that would be a $180,000 price. If this job goes south, and my labor over-run is 50%, I would lose $20,000. This is not likley with a good GC, but it happens. This is why I shy away from jobs where the owner furnishes fixtures, gear, etc. It becomes an all-labor job, and is too risky. Or, I will mark the job up as-if I was furnishing these materials. I will also not be competitive, so why bother bidding?
Most "good" electrical jobs run around 2.8/1 and up (3/1, 4/1). The above example, I would have to mark it up around 30% to cover my risk. I probably won't get that job.
 
If you know your true cost and want a true 35% return. You take your cost and divide by .65. example cost $125.00 resale = $192.30. If you take that same figure and use a 35% mark up it = $168.75 (thats $125.00 x 1.35)
Your gross profit on the first is 35% the second is 25.93%. Becareful of what you wish for.
We use a true 30% mark up on materials for most of our jobs. Larger ones may vary. My estimating program allows for multiple mark ups so we look at each job and determine what we think the bid will allow. There is no true science for bidding.

zig
 
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